Ask an Expert: What is an ICO?


Curious about the debate around Initial Coin Offerings – ICO’s? Join us ask we ask our resident expert, Taylor Gerring (and a special guest!), for a rundown on the crowd investing phenomenon that has taken the cryptocurrency community by storm! Are ICOs worth the risk? Check out the video to find out! And then explore some of our ICO or NO series, where we give you the run down on specific ICO projects in the making.

Where does the name ICO come from?

ICO Stands for Initial Coin Offering and is a play on the popular term “IPO”‘ standing for Initial Public Offering. Unlike IPOs, which are for companies to list their stock on a public exchange. Initial Coin Offerings are for blockchain projects to raise money without depending on private finances such as Venture Capital (VCs).

Thinking about how ICOs operate reminds me of how useful Kickstarter was when it first came out. If you haven’t heard of Kickstarter, it’s a website where people with ideas can collect money to carry out a project. Some famous Kickstart projects include Pebble Time (March ’15) which raised a whopping $20 M. Coolest Cooler (Aug ’14) bringing in $13.2 M, and Mystery Science Theatre 3000 (Dec ’12), which raised $5.7 M to reboot the series. But there are a couple of problems with this: Kickstarter takes a cut of all successful funding initiatives and the financial contributors receive absolutely nothing in return for their savvy investment.

 So ICOs are… (enter ICO guy, Jeremy!)

Explaining a little bit about how ICOs can be seen as investments…

You’re right about ICOs being used to crowdfund, but there’s also a huge profit motive driven by speculation that brings in the funding for ICOs. Because of the chance to make quick money investors are jumping at the opportunity to get a piece of these ICOs. We’re even seeing some ICOs bring in hundreds of millions of dollars, often selling out in seconds.

How can the teams possibly use all that money?

Each project is different, and some we have very little idea about. ICOs are still a fairly new concept. That’s why we’ve created ICO or NO, a series that explores new ICOs, providing the facts you need to make informed decisions. Be sure to stop by and check it out! It’s in your hands now Expert.

(Jeremy dissolves off screen)

Unlike centralized models in the past,

ICOs allow for direct & censorship-resistant way for users to contribute to projects. Initial investors are still rewarded for the project succeeding. Although the tokens can have value, they don’t necessarily represent any voting rights or equity. Often, they are just a license to use the platform. Many projects will fail, and some may be outright scams, so be sure to do your research before getting involved.

If you enjoyed this video, check out our previous Ask an Expert & subscribe to our YouTube channel. 

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